The Joint Committee received a report to advise Member of the recent European Court of Justice ruling in the Hemming v Westminster case. The ruling had implications for the way in which Local Authorities could charge for the cost of administering and enforcing certain licencing regimes.

The European Services Directive aimed to make it easier for service providers to operate across Europe. One of its key provisions was that licence fees could only be used to cover the cost associated with the administration of licensing regimes covered by the Directive. Local Authorities therefore could not make a profit from licensing or deter service providers from levying unreasonable fees. The Services Directive did not currently apply to taxi related fees (drivers, operators and vehicles), or fees and charges under the Gambling Act 2005 and the Licensing Act 2003.

In 2012, Timothy Hemming instituted legal proceedings against Westminster City Council contesting that the level of licence fees for sex establishments charged by Westminster City council were not reasonable. Westminster’s sex shop fees were in excess of £26,000; the fees included costs for the management of the regime and enforcement activities against unlicensed operators; it was this latter aspect of the fee that Hemming asserted not to be ‘reasonable and proportionate’ under the legislation.

The case was presented to the Administrative Court in May 2012 and to the Court of Appeal in 2013.

The Administrative Court (and subsequently the Court of Appeal) ruled that licence fees must not exceed the cost of administering the licensing process and that this could not include the costs of enforcement against unlicensed operators. However the judgement did make it clear that the costs of compliance and enforcement against licensed operators could be included in the licence fee.

The case was presented to the Supreme Court in April 2015.

Westminster Council appealed the decision of the Court of Appeal and, in April 2015, the Supreme Court overturned the Court of Appeal’s decision. The Court made it clear that Local Authorities could set their fees at a level that would enable them to recover the full costs of managing end enforcing the licensing regime, including the costs incurred in proceedings taken against unlicensed operators. The Supreme Court also gave consideration to how such fees should be structured. It identified two different approaches to charging licence fees as follows:

Type A - An application fee is charged to cover the authorisation procedures involved in the processing of the application, then successful applicants are charged an additional fee that covers the running costs and enforcement of the licensing regime.

Type B – The applicant is charged one fee upfront that covers all costs of the application process, and running / enforcement costs of the licensing regime. If the applicant is unsuccessful the portion of the fee that covers the running / enforcement costs is refunded to the applicant.

The Supreme Court had concerns about whether the fee structure identified as Type B was compatible with the EU Services Directive and felt that reference to the European Court of Justice was necessary for clarification.

In November 2016 the case was heard by the European Court of Justice (ECJ).

The ECJ ruled that the Type B approach of fee setting was not compatible with the EU Services Directive, arguing that the Directive ‘precludes the requirement for the payment of a fee, at the time of submitting an application for the grant or renewal of an authorisation, part of which corresponds to the costs relating to the management and enforcement of the authorisation scheme concerned, even if that part is refundable if that application is refused.

As with many other Local Authorities, the current position across the partner Authorities is that fees are charged in a Type B approach with all costs included in the initial application. It is extremely rare for applications under these licensing regimes to be refused a licence; however, a refund would be given in those circumstances.

The ECJ Ruling presented a number of issues for Local Authorities in discharging duties under certain licensing regimes. Licensing Authorities now needed to consider how to structure their fees under the Type A approach. The Judgement suggested that there should be two separate fees in place; one to cover the authorisation costs e.g. the cost involved in receiving and considering an application and an additional fee only paid by successful applicants to cover the running and enforcement of the licensing regime.

The report advised that it was worth noting that the Supreme Court view, which still held, was there was nothing to stop Licensing Authorities making the payment of such a fee a condition of holding a licence. This would mean that authorities could withhold licences until payment of the relevant fee had been received.

The report stated that the Services Directive would apply to licensing regimes such as sex establishment, street trading, animal related licences (pet shop, animal boarders etc) and houses in multiple occupation. Responsibility for these fees was shared between the Public Protection/Licensing Committees of each partner Council and the Joint Committee for Shared Regulatory Services.

In light of the ECJ judgement, the Shared Regulatory Service, in consultation with legal services, would begin a review of the process of issuing licenses and the associated fees to ensure compliance with the Services Directive. Local Authorities are awaiting further guidance from the Local Government Association and the Government on this matter. It was envisaged that any changes to fee structures would be in place by June 2017.

Importantly, the opinion of the Advocate General and the commentary contained in the judgement of the ECJ go beyond the specific issues that had been referred to it, and make further challenges on the issue of licensing fees highly likely. The opinion and the commentary in the ruling appeared to reopen the issue of whether including the costs of enforcing licensing regimes within licence fees was compatible with the Services Directive, with a strong indication that the Advocate General and ECJ believed that it was not. While the Supreme Court’s view on this issue remained in place at the current time, meaning Councils could continue to include these costs in their licence fees.

Following consideration of the report, the Committee

RESOLVED - T H A T the report be noted and the Committee receive a further report on this matter to ensure the Council’s Licensing processes reflected those advocated by the European Court of Justice.

Reason for decision

Having regard to the contents of the report and to ensure that the Council’s Licensing processes reflected those advocated by the European Court of Justice.

(e) Food Standards Agency Audit (DEH) -

The Committee received a report to update Members of a scheduled audit of the Food Service by the Food Standards Agency.

The Food Standards Agency in Wales has committed to a three year rolling programme of full audits to assess Local Authority service delivery. The Shared Regulatory Service was the first collaborative service to be audited as part of this programme.

In readiness for the audit a pre-audit questionnaire was sent in advance for completion. The aim of the questionnaire was to provide auditors with appropriate information in relation to the Shared Regulatory Services Food Law enforcement systems and procedures. The questionnaire was returned on 24th February, 2017.

An onsite audit was scheduled to take place week commencing 20th March, 2017. The onsite audit would consist of examination of files and records, interrogation of computer systems, reality checks at local food businesses and interviews with food law enforcement staff. Interviews would also be conducted with lead food hygiene and food standards officers along with interviews of Senior Managers.

It was not envisaged that elected Members would be involved in this audit, however it was confirmed that the Joint Committee would be briefed in relation to the findings.

Following consideration of the report

RESOLVED -

(1) T H A T the content of the report in relation to the audit that would be carried out in accordance with the Food Law Code of Practice be noted.

(2) T H A T the Committee continues to receive regular updates in relation to the performance of the Food Service.

Reasons for decisions

(1) To have regard to the content of the report in order that the Committee was aware of the scheduled audit from the Food Standards Agency.

(2) In order to allow the Joint Committee to exercise effective oversight of this key area of working.

(f) Overview and Update on the Shared Regulatory Service (DEH) -

The Committee received a report to update Members on the work undertaken by the Shared Regulatory Service (SRS). The report provided an overview of actions undertaken rather than a full breakdown of activities; these would be reported in the Annual Report submitted to the Committee in June 2017.

The Committee was provided with an update on ICT and mobile working, specifically the implementation of the single database

The Service has now implemented Tascomi, a consolidated database to replace the four instances of Civica / Flare that had been in place. In the last quarter, the teams had undertaken a data protection assessment to ensure that all data archived or migrated to the new system was compliant with the information governance requirements of each partner Council. Officers were in the final stages of testing data as it was transferred which was integral to the success of the consolidated database system. The project was on target to go live in mid-February.

The Committee was informed that the introduction of the new database should deliver a number of benefits as follows:

It alleviated the responsibilities on all three Councils' ICT services to maintain the four instances of Civica which would sit with the Vale of Glamorgan Council as the Host Authority.

The single database solution offered efficiencies to the SRS, most notably the ability to access the system at any time of the day, regardless of location creating a truly agile workforce.

The new database system was a "cloud based" product, thus removing the dependence on the traditional Council operated infrastructure and was an innovative approach to the delivery of services for the partner Councils.

Using data that was more robust supported the goal of a more resilient service, eliminated duplication of effort and enabled linkages into the planned Public Protection Cymru initiative which presented opportunities for further expansion and better interoperability

The Service had developed a single telephone contact number: 0300 123 6696 which went live in November 2016. It was operated through the Vale of Glamorgan's call centre C1V and calls were handled in English and / or Welsh. Calls previously managed by the Bridgend CBC contact centre were now handled by C1V, and calls from Cardiff would transfer to C1V in due course.

The Operational Manager for Enterprise and Specialise Services advised that the introduction of the single number should deliver a number of benefits;

Service users could now call a single number regardless of where they lived in the region and at times that would potentially be more convenient for them given the longer operating hours of C1V.

Calls to the single number could be logged more effectively and would provide the SRS management team with more reliable information about call volumes and service demand. It would also assist with understanding levels of customer satisfaction with the service.

C1V was a fully bilingual service and complemented the existing bilingual online provision available through the SRS website.

A Member asked whether there had been a large take up on the single number since it had been introduced and the Operational Manager advised that they had not seen detailed statistics for usage as yet but advised that the Contact Centre (C1V) had been very busy with calls since the number was activated.

A Member asked how the new number was being advertised, the Operational Manager advised there had been a soft launch in November 2016 and they were now publishing promotional material such as leaflets and the service would also be advertised on the internet and on press releases.

The Committee was informed that this change was largely focused upon improving the customer's experience rather than delivering efficiency gains and while there may be insignificant cashable savings, removing duplication from the system would enhance the capacity of the SRS to more effectively deploy its professional resources.

In referring to the financial monitoring report for the period 1st April, 2016 to 31st December, 2016, which was attached to the report at Appendix 1, the Head of Finance advised that the report had been prepared from the consolidated figures gathered from each Authority for this period and informed Members that the service was currently projected to overspend by £144,000 against the gross revenue budget. Information provided by the legacy Authorities advocated that this position could be mitigated by the level of income received directly by the Authorities.

The budget would fund the acquisition of the new SRS IT system and accommodated the associated cost of implementation. There was also a commitment of £46,000 included within implementation to cover the anticipated cost of setting up the SRS as a separate employer within the Cardiff and Vale Pension Fund as agreed by the Joint Committee.

The approved gross Core Services budget for 2016/17 was £6.173m, and was projected to achieve an underspend of £56,000. The Head of Finance drew the Committee’s attention to the issue of the control of horses and the cost to the service of providing appropriate accommodation and rehoming for 70 seized horses, which was £104,000, and anticipated this would be funded via £20,000 Welsh Government Grant, £50,000 drawdown from the earmarked SRS reserve with the remaining £34,000 picked up in the core budget. It was advised that an additional approach had been made to Welsh Government to investigate whether the match funding grant could be increased. The Head of Finance also provided the Committee with an update in regard to the underspend and overspend for the Core Services, a breakdown of which was detailed in the report.

The Head of Finance advised that the approved £2.610m in respect of Authority Specific Services was projecting an overspend of £200,000, breakdown of which was provided within the report. The anticipated overspend in Cardiff of £280,000, predominantly related to an anticipated £195,000 overspend in the Licensing Section. This was due to unbudgeted employee costs, disclosure and barring services costs, in addition the three year taxi survey had come in above budget. However, Cardiff had advised that this would be fully met by Licensing income in excess of budget, and was in line with income levels achieved in previous years.

In terms of the net position, the Committee was informed that there was an anticipated underspend of £412,000 at year end against a net budget of £6.059m, having taken into consideration the projected income received by the Participant Authorities. A full breakdown of the figures was contained with the report, attached at Appendix 1. The Head of Finance advised that some of the figures would need to be checked on year-end when the accounts were closed.

A Member asked whether the new single telephone number was accessible to customers from all three Authorities. The Operational Manager for Enterprise and Special Services advised that the telephone number would be accessible to all three Authorities, however, the call handling arrangements for Cardiff were currently still in Cardiff but would be transferred over in the future.

The Chairman expressed concern in regard to the issue of horses as this was an ongoing problem from year to year. The Head of Shared Regulatory Services advised that Welsh Government was currently reviewing the control of horses legislation in order to ascertain how successful it had been. He made reference to the seizure of 70 horses within the SRS area, and advised that the Authorities had to pay between 50% and 55% of the operation; however, there was no budget provision for Local Authorities to take on this work. It was a statutory area of work which the Authorities had to provided, however, they would try to recoup monies by prosecution through the courts.

Joint Committee Members had asked the service to provide data on activity levels to help reassure local Members that SRS activity continued to tackle issues across the region. Performance data for Quarter 3 of 2016/17 was set out at Appendix 2 to the report and was being reported to each Council in line with the legacy performance management regimes and existing service plans.

In presenting the performance information for the SRS, the Head of Service informed the Committee that they had recently recruited a new Trading Standards Officer, which would hopefully lead to improvements in the performance results for high risk businesses that required inspection from Trading Standards.

In terms of the performance statistics for Gambling Premises, the Head of Service advised that this indicator might not be reported in the future as there were no such premises in either Bridgend or the Vale of Glamorgan.

A Member queried whether there was a timescale for businesses which received a zero rating for food hygiene to appeal the decision. The Operational Manager for Shared Regulatory Services advised that the period for appeal was 21 days from the decision. Furthermore, the Licensing Authority had up to three months in which to re-inspect the property; however, the SRS was keeping to the all-Wales target, and revisiting all of these premises within four weeks, the cost of which was £160.

The Operational Manager further advised that a zero rating was not necessarily enough to close a business down; however, major improvements would need to be carried out at the premises. It would be made clear to the premises owner that the premises had unacceptable standards, and improvements needed to be carried out as a matter of urgency. The consequences of a zero food hygiene rating would depend on each premises and how they responded to the advice of the Licensing Authority and also any necessary enforcement action.

The Chairman advised that he was delighted to see the work that had been carried out by the Food Standards Team, and overall it was a positive report in terms of performance.

The Head of Shared Regulatory Services updated the Committee on the recent National Audit Office review of the Consumer Landscape and the report's key findings were summarised within the report, as follows:

There was no system-wide reporting of the impacts of consumer protection work across the country.

There was limited robust data on the overall scale of consumer detriment, but it was estimated that consumers lost at least £14.8 billion in 2015.

Consumers were facing increasingly complex and wide-ranging threats, in particular from the rise in e-commerce, and scams were becoming more targeted.

Government had improved the overall co-ordination of consumer protection bodies but had little control over the majority of resources, making effective system prioritisation difficult. Some 75% of funding was delivered locally, where Local Authorities had to balance resources with other services such as social care.

Local Authorities had demonstrated that they had achieved good impacts with limited resources. However, the nature of commerce was changing, and consumer detriment was increasingly national and international rather than local. The system had not yet adapted to these changes. The local level, which received the majority of funding, had suffered from declining status, significantly reduced capacity, and gaps in coverage which left consumers inadequately protected.

The report recommended that:

The Government should ensure that consumer detriment was estimated and reported regularly in a consistent manner.

The Government should work with relevant departments and Local Government, towards a shared understanding of risks to consumers, setting clear and realistic expectations of what each body should deliver, alongside reporting progress, so as to ensure that system priorities were met alongside local priorities.

The Committee was informed that as yet the Government had not responded to the report.

In February 2016 the Committee approved the Compliance and Enforcement Policy and the Head of Shared Regulatory Services advised that this document set out how the SRS would administer legal requirements, and the approach taken to deal with instances of non-compliance. That document contained reference to a number of annexes, one of which dealt with Feed Law enforcement and had been updated to reflect the merging of processes across the SRS. The document was attached at Appendix 3 to the report. The Joint Committee was asked to consider this annex, and agree that it be incorporated into the overarching Compliance and Enforcement policy for the SRS as Annex 2 to the Policy.

The Operational Manager for Commercial Services advised the Committee that Health and Safety in Residential Care Homes was an agreed priority intervention for Local Authorities in Wales for 2016/17. This followed the outcome of a number of accident investigations, Health and Safety Executive statistics on improvement notices in the nursing home sector, and a previous Local Authority intervention in 2009/10.

Members were minded to recall that a number of care homes had received a formal letter informing managers of contraventions and actions required to improve compliance. In addition, 14 Improvement notices were served, of which, 10 (71%) related to inadequate Legionella controls. This most recent exercise highlighted that improvements attained following the 2009-2010 care home project had generally lapsed, principally due to key staff changes in local level management. This suggested that “one-off” interventions could often achieve only short-term improvements. To assure a more sustained level of compliance the SRS intended to reinforce the initial project visits with a series of additional interventions over the forthcoming 12-18 months.

The Operational Manager informed Members that the SRS recently hosted a Residential Care Home Forum following a series of inspections from officers within the service. The Forum was used as a practical workshop where speakers from SRS, the Health and Safety Executive and Public Health Wales discussed the key areas of non-compliances, and duty holders were encouraged to apply their knowledge to practical situations. The event was deemed as a huge success with positive feedback given from the attendees.

The Chairman expressed the view that this was very good news as it was such an important area of the service.

In updating the Committee in relation to Primary Authority issues, the Operational Manager for Enterprise and Specialist Services advised that the SRS had recently entered into three new direct Primary Authority partnerships. The first of these was with Sloane Home Limited, a Vale of Glamorgan based producer of hampers and luxury gifts supplying to a number of high end outlets. The second was with Falcon Installations, a Bridgend based double glazing company. The Operational Manger advised that since the report was written, a third new partnership had been entered into, this being with the regional chain, Filco Supermarkets, bringing the total number of Primary Authority partnerships, managed by the Service, to twelve, rather than eleven as stated in the report. A number of other prospective partnerships were in the discussion phase, including one well respected national chain.

The SRS had been working closely with the Department for Business, Energy and Industrial Strategy (BEIS) to develop a UK wide toolkit to enhance Primary Authority engagement with businesses. This pilot work had resulted in the development of a number of useful resources and culminated in the SRS staging a breakfast event for food businesses at the Principality Stadium, Cardiff, on 16th February. Attendance had been good, and attendees were provided with business critical guidance in a number of key areas of food safety, such as dealing with allergens, prevention of cross contamination and improving a Food Hygiene Rating Scheme score.

The event also explored the benefits of working together through Primary Authority and the provision of Assured Advice; and networking opportunities were built into the agenda. Presentations were given by a number of SRS officers and were extremely well received. It was also advised that the SRS was currently following up on a number of expressions of interest from food businesses keen to work with them as Primary Authority partners; and the Operational Manager for Enterprise and Specialist Services informed the Committee that there had been some very positive feedback from this event.

At this point, the Head of Shared Regulatory Services introduced the Group Leader who headed up the Housing Enforcement Team in Cardiff Council.

The Head of Shared Regulatory Services informed the Committee that in the field of Environmental Health, the Authorities’ Housing Enforcement Teams protected public health by working with private landlords and owners to provide warm, safe and healthy homes for tenants. Across the three Authorities the service regulated nearly 25% of the private rented sector in Wales with a total of approximately 20 staff dedicated to what amounts to an extremely busy front line service.

The Team Manager gave a presentation to the Committee which provided an overview of the Housing Act 2004. He made reference to the Housing Health and Safety Rating System (HHSRS) which was a tool used to assess the safety and suitability of housing for the purposes of human habitation. It applied to all existing domestic properties and provided enforcement tools to make landlords carry out work to ensure properties were safe for habitation. HHSRS listed 29 potential safety hazards that could occur within domestic properties. Once a complaint had been received from tenants, Officers would inspect the property to identify any hazards. If necessary the Housing Enforcement Team would ensure that the landlord reduced identified hazards to an acceptable level.

The Team Manager outlined the four sets of hazards that the team dealt with in respect of properties, which were the psychological and physiological requirements of properties and the protection against accidents and hazards.

The Housing Enforcement Teams had a broad range of powers they could use for enforcement, which included listing improvements needed to properties and legal powers that could be employed if these were not carried out which could lead to prosecution.

He further provided the Committee with information in relation to Rent Smart Wales (RSW) which was the Welsh Landlord Registration and Licensing scheme administered across Wales by Cardiff Council. Private landlords must register their rental properties and either obtain a landlords licence or employ a licenced agent to manage their properties. Property details could be checked and further information could be found on the RSW website.

In presenting information on Houses in Multiple Occupation (HMOs) the Team Manager advised these often presented the poorest conditions and greatest management challenges. HMOs would typically be shared houses, bedsits, flat conversions or a mixture of flats and bedsits. They may house a particular sector, for example students or young professionals or unrelated, disparate people. He advised that HMOs provoked great interest, for example, in terms of illustrating the impact of students on communities and the housing of asylum seekers. Since 2006 mandatory licensing was required for three storey HMOs with five occupiers.

Where HMOs in an area were badly managed and had an impact on the tenants/ area, additional licensing was required and Councils were required to consult and make robust cases in these circumstances. The scheme operated for five years and once declared it operated as if it were a mandatory licensing. Landlords must apply for a licence and be “fit and proper”. HMOs were inspected and standards applied in terms of fire, space, amenities, and occupancy limits. Furthermore, licensing conditions were applied controlling the management of HMOs.

In terms of HMO licensing and complimentary initiatives, the Committee was informed that 3,000+ HMO licences had been issued in Cardiff. The Authority worked closely with both the Planning department and the Welsh Government which had resulted in “To Let” boards being eradicated in Cardiff; and they also exercised control over new HMO development. The Team worked in partnership with the Universities, employed a Student Liaison Officer and formulated a Student Community Action Plan. They also worked with the Police in terms of joint inspections and referrals, in order to reduce burglary; and carried out partnership working with the Fire and Rescue Services in relation to asylum seeker accommodation.

Following the presentation Members were provided with an opportunity to ask questions.

A Member asked whether an individual would need to register with RSW if they rented a room out in their own home. In response the Team Manager advised they were unsure if they would need to do so, however, if the property was let on a tenancy agreement, those occupying would be listed on the licence, therefore would be exempt. He advised that the landlord might possibly need an HMO licence, however, this would not be needed for up to two tenants, yet confirmed that all the Housing Standards required would still apply to these properties.

A Member queried what services were provided by the Team in regard to empty properties. The Team Manager advised that empty homes were a very wasted resource and could lead to poor perception of an area if left to deteriorate, and could also attract anti-social behaviour. He advised that Planners had powers to enforce an owner to improve the property visually if it was seriously detrimental to the area. It was important, in the long term, to encourage re-use of these properties and he advised that the Authority had a register of empty homes. These properties were visited regularly and Officers wrote to owners in order to provide them with their options, one of which was to rent it out through a social landlord. In extreme cases there was the option of Compulsory Purchase, or the Council could enforce sale if it had incurred a debt in relation to the property. He advised that the service was currently in the process of trying to recruit an Officer to support this work.

A Member asked whether the cycle of clearing and cleaning filthy and verminous properties would continue once the property had been cleaned by the relevant Authority. In response, the Team Manager advised that it was very difficult in these circumstances for the Housing Enforcement Officers, due to the extreme nature of these cases, however, there was a legal duty on Authorities to address these issues; therefore the Authority would need to clean the property again if it became filthy and verminous. There was continuing frustration in regard to these types of circumstances as it incurred a debt against the Local Authority for house clearances and cleaning which could amount to thousands of pounds each time. He advised that in certain circumstances court action may need to be considered to deal with the owner / occupier and also to recoup costs incurred by the Authority.

There being no further questions the Chairman thanked the Team Manager for a very interesting presentation and asked whether landlords were more proactive due to the new legislation being in place. The Team Manager advised that landlords were becoming more proactive, partly due to the work carried out by the Housing Enforcement Team, but also as the market was pushing up standards as landlords had a greater knowledge of the legal powers available to the team. He was of the view that there was still some way to go, particularly at the lower end of the market, as they were seeing more and more vulnerable people needing protection in this area.

In conclusion, the Head of Shared Regulatory Services drew the attention of the Committee to details of recent cases investigated by the SRS which had resulted in prosecution, which were set out in Appendix 4 to the report, and noted that it was unusual not to see a case in relation to Housing.

Following consideration of the report the Committee

RESOLVED -

(1) T H A T the contents of the attached report be noted and agreed.

(2) T H A T the Annex attached at Appendix 3 to the report in relation to Food Law Enforcement be agreed and incorporated into the overarching Compliance and Enforcement Policy for the SRS as Annex 2 to the Policy.

Reasons for decisions

(1) To keep the Committee apprised of the work of the service and progress towards completing the implementation programme.

(2) In order that the Annex be incorporated into the overarching Compliance and Enforcement Policy for the SRS.

(g) Date of Next Meeting -

The Chairman informed the Committee that the Annual Meeting of the Shared Regulatory Services Joint Committee would be held on Tuesday, 27th June, 2017.

The Chairman closed the meeting by advising that it was his last meeting as the Chairman before the upcoming elections and thanked all of those involved with the Joint Committee for their hard work and support during his Chairmanship.